Category: Latest Updates

China became a net importer of steel for the second consecutive month in July, despite crude steel production rising 9% year on year during the month, according to customs data released Aug. 26.

China may remain a net steel importer in August, but could return to being a net steel exporter sometime in the fourth quarter, market sources said.

China imported 2.46 million mt of semi-finished carbon steel products in July, comprising mainly billet and slab, up 4% from June. Added to finished steel imports, it took China’s total steel imports in July to 5.06 million mt, surpassing July’s steel exports of 4.18 million mt, customs data showed.

The steel imports in July were mainly from orders placed in May, when the Chinese domestic steel demand rebounded strongly, as the infrastructure and property construction sectors were boosted by monetary and fiscal stimulus.

At that time, other markets were still under lockdowns or recovering from the impact of the coronavirus pandemic, making China a very attractive destination for steel, sources said.

Exports improving

However, since July, China’s steel import orders have slowed, while export orders have improved.

This is because overseas markets have gradually resumed operations, while the Chinese domestic demand has been dented by rains, floods and high temperatures, market sources said.

Orders placed since July will be shipped from September onwards.

Some market sources said they had barely seen any import orders for semi-finished steel recently, while export orders for flat steel products had improved since July, and wire rod export business had also fared better since August.

“Our clients in Southeast Asia have begun to purchase wire rod again since August, and orders received in August recovered to around 40% of the normal volume before the coronavirus outbreak hit the global economy,” one mill source in eastern China said.

Moreover, China has tightened its monetary stimulus and strengthened restrictions in the property sector since July, putting downward pressure on the Chinese domestic steel market in the second half of 2020.

Some sources said there will be more opportunities for China to export steel in H2 2020 than there was in the first-half.

— Analyst Jing Zhang, Analyst Joy Zhuo

German stockholders reported an increase in steel inventories in July as European countries emerged from coronavirus-related lockdowns and optimism slowly returned, according to data from trade association BDS Aug. 21.

Flat steel stocks increased by 34,814 mt month on month in July, a gain of 1.5%, and the first month of inventory build since May.

In the longs product category, inventories increased in July by 27,515 mt or 3.5% month on month, marking the first increase since April.

On an annualized basis, flat steel inventories were down 12% or 179,335 mt lower, while long steel inventories declined 6.5%, or 56,372 mt, versus July 2019, according to the trade association.

Sales of stocks were up for both long and flat steel month-on-month, rising 30,011 mt, or 10.7%, in the long steel category and 41,301 mt, or 9.1%, in flat steel products.

The other products group saw a sales increase of just 1,610 mt in July compared with the previous month.

On a year-on-year basis, the data showed sales of stock material for long products down by 14,224 mt, or 4.4%, while flat products stock sales decreased by 81,115 mt, or 14.1%, in July. Stock sales from the other products category slipped 14,535 mt in July versus one year prior.

A European mill source said he expects the restocking to continue towards year-end as demand continues to improve.

“The largest effect at the moment is from the steel service centers as they had only just started to restock when the coronavirus lockdown struck in the spring and now that demand is pushing back to 90% of normal levels the existing stocks will look insufficient,” he said.

— Len Griffin

NLMK Lipetsk has started construction of a new continuous hot-dip galvanizing line, HDGL-5, the company says.

The capacity will be 450,000 tonnes/year of galv, Kallanish notes. The investment will exceed RUB 12 billion ($158 million). The start-up of the line is planned for 2022.

In 2019, NLMK signed a contract with Tenova for base engineering and the supply of main process equipment. The new line will produce high-quality steel for the construction, automotive, and white goods industries.

Currently, NLMK Lipetsk’s coated steel operations comprise four continuous hot-dip galvanizing lines with a total capacity of 1.25 million t/y and three pre-painting lines with a 550,000 t/y capacity.

NLMK’s steel output and sales were impacted in the second quarter by declining demand in its traditional sales markets due to the Covid-19 pandemic (see Kallanish passim). It expects lower on-year steel output at its principal Russian Lipetsk site in Q3 because of major overhauls of its hot-end operations, namely blast furnace No.4 and basic oxygen converter No.3.

Consolidated output of crude steel decreased to 3.9mt in Q2, down by -8% on-quarter and -3% on-year. This was due to lower capacity utilisation rates at NLMK Russia Long Products and NLMK USA.

The European Commission has opened an expiry review into existing anti-dumping measures on imports of Chinese and Taiwanese stainless cold rolled coil, Kallanish learns from an official statement.

The review was opened following a complaint lodged by Eurofer earlier in May and is expected to be concluded by the end of 2021. In the meantime, the existing AD duties of between 6.8% and 25.3% – depending on the supplier – will remain in place. The review could result in the duties being maintained for five more years.

“The applicant [Eurofer] has provided evidence that, should measures be allowed to lapse, the current import level of the product under review from the countries concerned to the Union is likely to increase significantly due to the existence of unused capacity in the countries concerned and the attractiveness of the Union market,” the Commission says. “In addition, in the absence of measures, export prices of the countries concerned would be at a level low enough to further injure the Union industry.”

ArcelorMittal Distribution Solutions Polska retained first place in the Polish Union of Steel Distributors (PUDS) ranking of top-performing Polish steel distributors in 2019, Kallanish notes.

The firm sold 1.45 million tonnes of steel in 2019, up 17% on 2018 and more than double its nearest rival, Konsorcjum Stali, which sold 684,000t. It also came top in revenue terms, clocking PLN 3.55 billion ($951.1 million), although this was down -2% on-year. It did not provide profit figures.

Konsorcjum Stali, which recently delisted from the stock exchange, dropped one place to third in revenue terms, registering PLN 1.69 billion, down -7%. It fell two places to fourth in net profit terms, registering PLN 17.7m, down -58%.

Bowim was third-largest distributor and the largest listed one in tonnage terms, shipping 514,000t in 2019, up 1% on-year. It fell one place to fifth in revenue terms with PLN 1.3 billion, down -4%. It was tenth in profit terms versus sixth a year earlier, with PLN 3.2m, down -72%.

Like the year before, Stalprofil and Grupa Pruszynski took fourth and fifth place respectively in tonnage terms with 418,000t and 296,000t respectively, up 7% and flat on-year.

Grupa Pruszynski was second in revenue terms and first in profit terms with PLN 1.76 billion and PLN 67.4m respectively, up 4% but down -8%.

Stalprofil was fourth and second in revenue and profit respectively, with PLN 1.32 billion and PLN 21.9m respectively, flat on-year and down -36%.

Notably, Balex Metal and Gonvarri Polska were third and fifth in net profit terms, up from fourth and 15th respectively in 2018.

ArcelorMittal South Africa (AMSA) has temporarily shut down its Newcastle Works blast furnace after the unit suffered thermal damage and broke down. As a result, the firm has declared force majeure. The unit’s repairs will take an estimated three weeks, a spokesperson for the steelmaker tells Kallanish.

“Every effort is being made to resolve the problem quickly and to restart production as soon as possible to limit the impact on customers,” the spokesperson says. In the meantime, the placing of the Vaal (Vereeniging) Melt Shop into care and maintenance has been delayed until the end of October to absorb some of the Newcastle production.

AMSA’s steel sales plummeted -47% on-year in the first half of 2020 to 1.15 million tonnes, with local sales down -40% to 946,000t (see Kallanish passim). Blast furnace C at the Vanderbijlpark works and the Vereeniging electric arc furnace remained idled. The firm has announced a large-scale labour re-organisation in terms of Section 189(3) of the Labour Relations Act 66 of 1995 due to the impact of the pandemic.

Voestalpine will in early September restart the small blast furnace in Linz which has been idle since March, following the abrupt slump in customer demand caused by the Covid-19 pandemic.

The gradual revival of demand is most pronounced in the automotive, electrical, and processing industries, and has led to an increased need for high-quality steel grades, making this step possible, the company states. The first signs of recovery are also evident in the mechanical engineering and energy segments, for which the site in Linz also produces high-quality steel products, Kallanish understands.

Together with the two other blast furnaces at the site, the restart of the small blast furnace brings steel production back up to almost normal levels, after capacity was throttled back following Covid-19. Together they have an annual pig iron production capacity of around 5 million tonnes. Another two blast furnaces at the site in Donawitz have a capacity for up to 1.5m t/year of pig iron.

Voestalpine says the economic recovery is impacting the group differently according to region and market segment. The railway systems and high bay warehousing technology sectors are performing well, while in contrast the aerospace and oil & natural gas industries have been particularly hard hit by the impact of the pandemic.

The production of seamless tube for the oil & gas industry has been facing a competitive disadvantage due to protectionist tariffs since 2018.

Swiss steelmakers’ exports to neighbouring countries are facing new limitations after the EU tightened safeguard restrictions.

Although sitting centrally in Europe and surrounded by EU countries, the Alpine country itself is not a member of the Union. It is therefore subject to the same restrictions as other third countries such as Turkey and Belarus.

“Switzerland is being treated like any other third country, although production costs here are actually higher,” Stahl Gerlafingen managing director Alain Creteur bemoans in an interview with Solothurner Zeitung. “And the [EU] steel industry is even demanding stricter regulations.”

He cites the example of sections, for which the EU has imposed a limit of 16,000 tonnes for imports from Switzerland. Stahl Gerlafingen has an annual production capacity for sections of 300,000 tonnes, of which three quarters used to be for export. “It’s a disaster,” Creteur exclaims.

Meanwhile, Schmolz+Bickenbach’s Swiss Steel seems to be hurting less from the EU restrictions, it tells Kallanish upon request. Its greatest pain is the drop in demand for SBQ steel from the ailing automotive industry. This has been worsening since the Covid-19 lockdown of assembly lines at carmakers.

“With demand as low as it is, the stricter safeguards don’t mean additional pain,” an S+B spokeswoman says. Also, with its diverse locations in EU countries like France and Germany, S+B group can easily handle deliveries within the EU from units other than Swiss Steel.

Rogesa, the joint pig iron works owned by Dillinger Hütte and Saarstahl in Germany’s Saarland, has begun hydrogen-based steel production.

According to the companies, the Dillingen works is the first site in Germany that uses hydrogen as a reducing agent in a blast furnace in normal operation. This is accomplished by injecting hydrogen-rich coke gas.

“We can further reduce our carbon emissions on the basis of this technology while gaining important experience in using hydrogen in steel production,” explains technology director Martin Baues. “The plant will enable us in the next step to use pure hydrogen in both blast furnaces.”

The investment in the new technology has amounted to  €14 million ($16.5m), Kallanish understands.

“Our ambitious goal is to reduce carbon emissions by 40% by 2035,” says the mill group’s ceo Tim Hartmann.

At a visit of German economy minister Peter Altmaier last week, Hartmann demanded that the political framework for this must still be created this year.

“The German government’s Steel Action Plan and the current German presidency of the EU Council provide the framework for Berlin and Brussels have to demonstrate their commitment to the Green Deal,“ he said.

Crude steel production in the 64 countries reporting to the World Steel Association in July registered a decrease of 2.5% on the year to 152.7 million metric tonnes in July, due to the ongoing COVID-19 pandemic, the association said Aug. 24.

North America and Europe registered the largest drop, down 28% to 7.2 million of mt and 24.4% to 9.81 million mt, respectively.

In North America, the United States produced 5.2 million mt of crude steel in July, a decrease of 29.4% compared to July 2019, while the largest European steel producer, Germany produced 2.4 million mt of crude steel in July, down 24.7% from last year.

Asian counties registered an increase of 2.3% last month to 116 million mt on the year, with China posting a rise of 9.1% at 93.4 million mt of crude steel while Vietnam showing an uptick of 19.8% to 2.15 million mt.

All the other Asian countries registered a fall. Japan produced 6.0 million mt of crude steel in July 2020, down 27.9% from July 2019. South Korea’s steel production for July 2020 was 5.5 Mt, down 8.3% from July 2019.

Turkey’s crude steel production for July was 3.1 million mt, up 7.4% from July 2019. South American countries registered a decrease of 6.1% to 3.12 million mt. Production in the Commonwealth of Independent States is estimated to be 8.1 million mt in July, down 5.8% on the year. Ukraine produced 1.8 million mt of crude steel in July, down 1.9% from last year.

— Annalisa Villa